JOINT VENTURE

A grouping of two or more individuals or legal

entities who commence transaction together
for mutual gain or to engage themselves in a
commercial enterprise with mutual sharing.

A joint venture (JV) is an unit formed between

two or more parties for their economic activity.
Here, the parties may agree to create a new
entity and then organize, share expenditure,
and revenue of that enterprise. The venture can
be for one specific project or for continuing
business association.
 International Joint Ventures
• Understanding cultural backgrounds of
all the countries involved.
• Understanding legal and regulatory
regime of all the jurisdictions involved.
• Negotiating win-win contract.
• Giving leeway for international
environment
• Termination Terms and Conditions.
Government Approvals for Joint Ventures
All the joint ventures in India required
government approvals, if a foreign partner or
an NRI partner is involved. The approval can
be obtained from either from RBI or FIPB
(foreign investment promotion board).
 Formalities
1. Whether the joint venture company will be a
public or a private limited company.

2. The place of Registered Office of the Joint

venture Company.

3. Name of the joint venture company and

check its availability from the Registrar of
Companies (ROC) where the registered office
of the company is to be situated and the
company is to be incorporated.
4. Choose the subscribers to the Memorandum
of Association which will obviously include
the partners to the joint venture and their
nominees.
5. Prepare the Memorandum and Articles of
Association in consultation with the joint
venture according to Companies Act 1956
(Act) to ROC along with fees payable.
6. On receipt of certificate of incorporation, the
new company may start business,
(i) in case of private company, immediately.
(ii) in case of public company ,after obtaining
certificate of Commencement of Business for
which the company has to file with the ROC.
 Nonresident Partner
In case, one of the partner of the joint
venture company is a non resident, approval
of RBI will be required. RBI has granted
general permission to a non resident Indian
citizen / person of Indian origin under FEMA
And such company is also permitted to issue
shares to the non residents subject to the
condition that the total face value of shares
is not to exceed Rs 10,000
 Approvals
The Joint Venture agreement should be
obtained all necessary approvals/ consents/
licenses /permissions of appropriate
agencies of Government of India like RBI/SIA.
 Important clauses of a joint
venture agreement
1. The proportion of shareholding in the joint venture
company
2. Specify nature of shares, indicate their
transferability conditions.
3. Composition of the Board of Directors,
Appointment of Chairman, Quorum of Board
meetings.
4. General meeting.
5. Appointment of CEO/MD.
6. Appointment of Management Committee.
7. Important decisions with mutual consent of
partners
8. Dividend policy.
9. Funding provisions.
10. Change of control/exit clauses.
11. Protection clauses.
12. Dispute Resolution.
13. Applicable law.
14. Termination provision
 Reasons for dissolving a joint
venture
• Original venture met.
• Original venture not met.
• Either or both parties develop new goals.
• Either or both parties no longer agree with
joint venture aims.
• Time agreed for joint venture has expired
• Legal or financial issues.